BY ENERGY TECHNOLOGY COMMITTEE MEMBER JAI SHAH, KAHUNA WORKFORCE SOLUTIONS
The energy sector has experienced remarkable consolidation driven by many strategic, economic and operational drivers. Historically, mergers and acquisitions (M&A) in this industry have primarily centered around investment acquisition, organizational growth and expanding market share. However, as the industry undergoes dynamic transformations, Deloitte reports that new drivers such as the energy transition, ESG considerations, energy security, low-carbon partnerships and operational excellence will play a pivotal role in M&A moving forward, with “low-cost, low-carbon” as the mantra.
Transitioning into the practicalities, it is evident that the success of an M&A extends beyond just strategic planning and financial execution. No matter the guiding driver for merging organizations, one of the most critical keys to a seamless transition is the effective utilization of human capital. Beyond the financial and strategic alignments, understanding — at a granular level — the skills, capabilities, expertise and experiences of the workforce can provide crucial information for post-M&A operations. This understanding leads to more effective workforce management as new processes and procedures, systems and technologies, skills and cultures are integrated. It also keeps safety at the forefront during the transition period. Here’s how organizations going through M&A can understand skills and leverage skills data to achieve operational excellence.
Assessing Organizational and Workforce Skills
Conduct a thorough analysis of workforce skills for organizations included in the M&A, including technical, soft and leadership skills. This data obtained from HR records, interviews or a skills management platform, provides invaluable insights for merging entities to understand what skills and experiences are available between the organizations, where overlap may occur and what gaps exist.
Plan for Strategic Workforce Integration
Once the initial skills assessment has been conducted, leaders can strategically plan how to merge the workforce. What critical skills are needed to operate the business, and who are the key personnel with those skills? Consider what business ventures are planned now and those planned for the future. This data provides pivotal insights for restructuring employees, curating training and development plans, hiring strategically, retaining talent post-M&A, and aligning skills and capabilities to enhance organizational synergy.
Retain Talent and Proactively Address Voluntary Employee Turnover
Throughout an M&A, the risk of employee turnover is common, as is the loss of institutional knowledge and operational disruption. PwC reports that only 41% of firms have significant success in post-M&A employee retention. Combining entities should have a strategy focused on retaining the best talent that meets the combined interests of the organizations. Incorporating skills data into retention strategies can help leaders identify these individuals, and more clearly and effectively communicate where or how they fit into the organization. This gives employees confidence they are valued and reduces anxiety caused by disruptions, even if their roles and responsibilities change.
Allocate Resources Effectively
An M&A deal often expands the talent pool and provides access to highly skilled employees. When allocating these individuals into their roles, using skills data as a guide can help leverage their strengths more effectively and place them in the right roles that will be most beneficial to them and the organization overall. This increases operational efficiency, enhances productivity and facilitates knowledge sharing for key institutional knowledge and processes.
Ensure Safety and Compliance Remain a Priority During the Transition
Throughout an M&A, diverse cultures, operational processes, and regulatory compliance requirements may be brought together, and even amid the transition, business operations must be able to continue without disruption. Skills data becomes a critical enabler of maintaining operational continuity, providing insights into which employees possess safety-critical skills, certifications and experiences. With this knowledge, leaders can proactively mitigate risks and safety incidents by safely deploying the most qualified individuals to the job site, providing targeted training where gaps exist, and standardizing safety procedures and processes to form a more unified, comprehensive safety protocol.
Unify Organizational Cultures
McKinsey suggests three key steps to understanding and managing organizational culture during M&As: Diagnose how the work gets done, set priorities, and hard-wire and support change. Once key values have been established, embedding them into skills and competency management helps hard-wire them into workforce processes from the beginning. Employees have routine visibility into what is important to the business, and skills data helps leaders identify employees with the right mindset and adaptability to facilitate a smooth transition in operations while keeping organizational values at the forefront.
Leveraging Skills Data for Strategic M&A Success
Mergers and acquisitions are powerful strategies for energy organizations, especially as new operational approaches are needed for clean and renewable initiatives. As businesses navigate M&As, it’s essential to recognize the workforce’s role throughout the transition process and in building the newly established entity. Workforce skills data is a crucial tool that organizations aiming to lead the market can use to build efficient, safe, sustainable, and competitive operations and newly established organizations.
ENERGY TECHNOLOGY COMMITTEE MEMBER
JAI SHAH, KAHUNA WORKFORCE SOLUTIONS
Jai Shah is the CEO and Co-founder of Kahuna Workforce Solutions. With 20+ years of practical implementation, architecture, and management experience, he is passionate about connecting HR with Operations through applied technology and rich data solutions. He specializes in guiding the development of skills applications that make a difference for end-users and deliver real business value to operationally focused environments.
